The end of budget day carnival?

Ever wondered why, in the first place, the Indian budget has always been such a media event? It is actually quite unique as in no Western democracy, least of all in Britain (the Westminster model), does the budget session raise more than a few low brows, a few protocol remarks, and that’s it. Harold Wilson, when he was Britain’s chancellor of the exchequer, put it perfectly when he had this to say about the budget: “Rather like a school speech day: a bit of a bore, but there it is.”

In India, we have been led to react differently. For the past several decades now, this event has always met with a cheer or jeer reception. It is hotly anticipated for a month, with speculations aplenty. Then it’s a full-on blast when the budget is actually presented, after which a frenzied search begins for carrots among the sticks; who has won and who has lost? Did information technology gain over oil and gas? Or, were they both upended by pharma? Where is the policy in all of this? If there is one, is it pro-rich or pro-poor? Are we feeding pigeons or songbirds?

It is not as if a mature economy does not have to face crises. Take the United Kingdom again, as an example. Its economic fortunes have seen many highs and lows. Yet, most taxes there, including all indirect taxes, petroleum revenue tax and taxes on capital are “permanent”. That is why the British budget, as in most other democracies, is about as predictable as EMIs are for households. In Britain, the statement of budget expenditures is sent, without fanfare, to select committees of the House of Commons for a review, which never discusses matters of policy.  

On this count, the latest Indian budget is a disappointment for carnival lovers. If the current trend continues, very soon the budget session will become quite boring, and that’s not a bad thing. Infrastructure spend is showing a steady increase over the past four years, while doles and handouts are rapidly decreasing in importance. It is the latter that always gave the budget the maximum buzz for the money. If swings in concessions and rebates no longer occupy the front seats, it is a sure sign that the budget will meet a flat, straight line reception, as this one has. The finance minister will then no longer be the stand-in flamethrower in Parliament on budget day. But should not that be welcomed?
 

The chances are that the Indian budget is probably moving away from mercurial swings as the current hike in infra spending is a continuation of a trend that began timidly three years ago. This year the climb was steep and if this curve holds the course, then the chances are that our budget too will become dull and colourless like the British one has always been. No doles, no freebies, amounts to no gossip and no chatter. In Britain, from where we have emulated the budget tradition, the budget speech is usually so staid that parliamentarians can’t wait for it to be over so that they can dart out for refreshments.

In India, the average length of a budget speech is about 13,600 words and takes over two and a half hours to complete. In contrast, from the year 2000 on, the UK budget speech has been almost always under one hour. For example, Rishi Sunak’s, rather flamboyant, budget speech in March 2021 was over in less than 50 minutes, though this time it uncharacteristically digressed into the Covid crisis and economic downturn.

Even so, there were few jolts. Except for extra aid to the hospitality and leisure sectors, such as gyms, pubs and museums, Chancellor Sunak hardly pronounced concessions or cutbacks that either benefited or set private entrepreneurs or white goods consumers back. Though there was a strong proposal to raise the duty on spirits, wine, cider and beer, that did not eventually happen.

On the other hand, Covid perhaps had at least one salutary effect; it inspired Mr Sunak to invest more in public services such as science, in housing for the poor and in clearing the National Health Service backlog. Now, that’s the kind of “handout” citizens in any country would welcome while gossip-mongers in mass media would despair.

Television has, undoubtedly, contributed hugely towards making the budget into a major media event in India, but gawking at this spectacle has an older history. In Mumbai, Nani Palkhivala, the famous jurist, held thousands spellbound with his annual fix on the budget in the Brabourne Stadium. So, there is something else about India which makes our budget session rather unique among well regarded countries. What could that be?

Could it be that our budget, unlike elsewhere in the democratic world, was always viewed as an ersatz policy document? In which case then, even in Palkhivala’s times, people looked to the budget for leads on this matter and not to the vaunted Five-Year Plans of that era. But if it were a policy document why then did concessions to different sets of producers and consumers keep changing from year to year? In the popular imagination, budgets were always expected to declare “and the winner is”. Hopefully, from now on, budget announcements will get increasingly dull and commonplace. Time will tell.

If, beginning this year, there is a consistent amping down of the Indian budget, it will free future economists from making a big bang out of what should always have been a whimper.

The writer taught for nearly three decades in Jawaharlal Nehru University